In a command economy, decisions about which goods are produced are based on what the government decides is important for society.
Command economy, an economic system in which the means of production are publicly owned and economic activity is controlled by a central authority that sets quantitative production targets and allocates raw materials to productive enterprises.
What is an example of a command economy?
In a command economy all resources are owned by a government or central authority that decides what to produce, how and for whom. Examples include the former Soviet Union, Cuba, and North Korea, all of which have and continue to have market activity.
What is the basic idea of the command economy?
In a command economy, the central government makes all economic decisions. Either the government or a collective owns the land and the means of production. It does not rely on the laws of supply and demand that exist in market economies. Command economies also ignore the conventions that guide traditional economies.
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